SunPower Expects 300 Megawatts of Sales From China Plant

March 27 (Bloomberg) -- SunPower Corp., the second-biggest
U.S. solar manufacturer, expects to sell about 300 megawatts of
systems this year from a factory in China that may eventually
serve as an export hub.

The factory is producing components at an annual run-rate
of 50 megawatts and will eventually have 300 megawatts of
capacity, according to Chief Executive Officer Tom Werner.

SunPower is seeking a foothold in the world’s largest solar
market, where demand for utility-scale projects is surging,
Werner said. About two-thirds of all generating capacity
installed over the next 10 years will be in China.

“It’s just the beginning of utility scale in China,”
Werner said in an interview yesterday at Bloomberg’s
headquarters in New York. “If you want to be a big solar-electricity generator, it’s hard to do it without being in
China.”

About 19 percent of SunPower’s sales in the fourth quarter
came from utility-scale power plants, and the rest from
residential and commercial projects.

SunPower will be competing for a “multiple-gigawatt”
slice of the Chinese market, which may reach 15 gigawatts a
year, Werner said. The company’s plant in Inner Mongolia
produces components for its C7 Tracker systems. He expects to
springboard from there into other countries.

“Yes, we want to export to other markets,” Werner said.
“If you compete there and create a supply chain, it can become
a platform.”

Joint Venture

The factory is part of a joint venture with Tianjin
Zhonghuan Semiconductor Co., Inner Mongolia Power Group Co. and
Hohhot Jinqiao City Development Co. SunPower said March 25 it
had sold more than 70 megawatts of cell packages to Huaxia
Concentrated Photovoltaic Power Co. for two projects in Inner
Mongolia, an area almost twice the size of Texas.

“The upside potential in Inner Mongolia, just in that
province, is a number that’s almost as big as what we’ve done
the last few years in America,” Werner said.

The deals in China “are a major milestone,” Rob Stone, an
analyst at Cowen & Co., wrote today in a note to investors.
“SunPower’s development experience should help grow the
business throughout China” and is likely to be followed by
exports.

Stone rates the shares the equivalent of a buy with a 12-month price target of $40. SunPower gained 0.2 percent to $31.73
at 2:33 p.m. in New York.